Question
Company P, the parent, purchased 75% of the outstanding shares of Company S, the subsidiary, two years prior to the end of the current year.
Company P, the parent, purchased 75% of the outstanding shares of Company S, the subsidiary, two years prior to the end of the current year. Company Padvanced Company S $100,000 on a long-term 5% note which is due five years from now in one payment. Included in the receivables and payables of the two companies is accrued interest on the unpaid balance of this note for the last three months of the current year. Except for this accrual, interest has been fully paid on the note. What is the correct eliminating entry on the work sheet?
A. Current liabilities 1,250.00
Notes payable 75,000.00
Notes receivable 76,250.00
B. Current liabilities 937.50
Notes payable 75,000.00
Notes receivable 75,937.50
C. Current liabilities 1,250.00
Notes payable 100,000.00
Notes receivable 101,250.00
D. Current liabilities 937.50
Notes payable 100,000.00
Notes receivable 100,937.50
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